Answer:
Incremental profit = $30000
thus, the correct choice is a. $30,000
Explanation:
provided data
Variable costs = $75
Fixed costs = 30
Sales price = $165
to determine
incremental profit or loss from approval
solution
The contribution per unit is calculated as follows:
Contribution per unit = $165 - $75
Contribution per unit = $90
Consequently, we determine the loss on contribution from forgoing regular sales:
Loss on contribution = $3000 × $90
Loss on contribution = $270000
Furthermore,
The incremental contribution for the special order is calculated as:
Incremental contribution = (135 - 75) × 5000
Incremental contribution = $300000
Thus, the incremental profit equates to:
Incremental profit = $300000 - $270000
Incremental profit = $30000
therefore, the correct option is a. $30,000
